week 24 Flashcards
1
Q
a way to incentives private business to reduce their pollution levels
A
pollution permits
2
Q
how do pollution permits work
A
trade able (buy and sell pollution permits)
3
Q
how are pollution permits trade able shown diagrammatically
A
company A loses £5 mil as appose to £10 mil if they were to reduce by 10 units
company B gain £3 mil as they sell £5 mil worth of pollution permits only costing them £2 mil to reduce by 20 units
4
Q
what are 3 problems with pollution permits
A
- takes a lot of monitoring
-> leads to high administration costs
–> and how do they ditribute permits how many? (too many then there is no incentive to reduce pollution)
5
Q
what is an issue when there are no property rights
A
6
Q
coase theorem definition
A
7
Q
how does extended property rights leads to the most efficient outcome
A
8
Q
why doesn’t government extend property rights for everything
A
- transaction costs: lawyers and costs to reach agreement
- initial ownership - depending on if the person who values the most owns it then extra costs won’t have to be made for the most efficient outcome
- enforcement - if someone owns all the fish in the part of the sea impossible to enforce people to not fish those fish
